Gold has been dominating the industry for many years. It has been a major force in the financial markets and even became a standard for countries to monetize their currencies. However, in recent times, that’s not the case. Gold has been mediocre in the markets, rising and falling at small intervals while other assets such as equities, real estate, digital currencies, and currencies have increased significantly. Gold is reportedly said to be down by 9% since the beginning of the year.
Bitcoin, on the other hand, is widely known across the globe for its potential to deliver unprecedented returns. This year alone, Bitcoin is currently up by a stunning 99% after an outrageous 302% gain in 2020. The prominent rise of Bitcoin compared to Gold and other assets is quite intimidating as cryptocurrency experts and enthusiasts jumped at it when the opportunity was presented.
Can Bitcoin replace Gold?
Many experts believe that Bitcoin cannot play the role of Gold. This deduction is based on the fact that although Bitcoin is heavily utilized for trading purposes and deployed as a medium of exchange by financial institutions, Gold still maintains its standards as the go-to asset for many investors, as it has been for a long time.
Logically, Bitcoin is extremely volatile and cannot be trusted to maintain long-term standards. For example, if inflation does occur, Bitcoin cannot be trusted by investors to protect their investments against inflation. Gold, however, has a history of withstanding market collapses and protecting investments from inflation or any other irregularities. Bitcoin is a better investment when opting for a short-term option but Gold is a stable option that guarantees a solid return on your investment in the long run.
Pros of Gold
1. Stability
Gold has proven time after time to be a stable and reliable asset in the long run. Its ability to increase steadily over time cannot be overlooked as it increases when the economy is in a recession.
2. Durability
Gold has been exciting for a long time as a currency around the world. Its scarcity and peculiarity have made it an asset for trading in the financial markets. Gold has survived many market crashes, inflation, recessions, and other market irregularities over the years, making it a long-term, durable asset.
Cons of Gold
1. Security
The precious and scarce nature of Gold has made it a target for thieves and robbers. So, if you own Gold and choose to store it in your house, it is advisable to store it in a safe or vault.
Pros of Bitcoin
1. It can be easily sold
Bitcoin can be easily transferred from one user to another or sold for its dollar equivalent. This is because Bitcoin is completely digital and be sent in contact via QR code or by using a third-party software to connect you with a buyer.
2. It can be used as a method of payment
The success of Bitcoin has also seen companies utilize it for receiving payments and accepting them. It is already deployed by some companies as a currency for their daily tasks.
Cons of Bitcoin
1. Volatile
Bitcoin is very volatile and susceptible to heavy price fluctuations in a short period. This reason is why Bitcoin is not very suitable for long-term investments.
2. Susceptible to scams/attacks
The rewarding nature of Bitcoin has attracted a lot of scammers and hackers to attain Bitcoin through illegal means.
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Conclusion
Both Bitcoin and Gold are dominant forces in the financial markets. However, it is imperative to know what choice to make when investing. Bitcoin is a better investment for short-term potential gains, while Gold is most suitable for long-term investments.
